Correlation Between Petroleo Brasileiro and Lokman Hekim

Can any of the company-specific risk be diversified away by investing in both Petroleo Brasileiro and Lokman Hekim at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Petroleo Brasileiro and Lokman Hekim into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petroleo Brasileiro Petrobras and Lokman Hekim Engurusag, you can compare the effects of market volatilities on Petroleo Brasileiro and Lokman Hekim and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Petroleo Brasileiro with a short position of Lokman Hekim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petroleo Brasileiro and Lokman Hekim.

Diversification Opportunities for Petroleo Brasileiro and Lokman Hekim

0.36

Correlation Coefficient

Petroleo Brasileiro  Lokman Hekim

Weak diversification

The 3 months correlation between Petroleo and Lokman is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Petroleo Brasileiro Petrobras and Lokman Hekim Engurusag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lokman Hekim Engurusag and Petroleo Brasileiro is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Petroleo Brasileiro Petrobras are associated (or correlated) with Lokman Hekim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lokman Hekim Engurusag has no effect on the direction of Petroleo Brasileiro i.e., Petroleo Brasileiro and Lokman Hekim go up and down completely randomly.

Pair Corralation between Petroleo Brasileiro and Lokman Hekim

Considering the 90-day investment horizon Petroleo Brasileiro Petrobras is expected to under-perform the Lokman Hekim. In addition to that, Petroleo Brasileiro is 1.86 times more volatile than Lokman Hekim Engurusag. It trades about -0.08 of its total potential returns per unit of risk. Lokman Hekim Engurusag is currently generating about 0.04 per unit of volatility. If you would invest  1,674  in Lokman Hekim Engurusag on September 22, 2024 and sell it today you would earn a total of  16.00  from holding Lokman Hekim Engurusag or generate 0.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	91.3%
Values	Daily Returns

Petroleo Brasileiro Petrobras  vs.  Lokman Hekim Engurusag

Petroleo Brasileiro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petroleo Brasileiro Petrobras has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, Petroleo Brasileiro is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Lokman Hekim Engurusag

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lokman Hekim Engurusag has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Lokman Hekim is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petroleo Brasileiro and Lokman Hekim

The main advantage of trading using opposite Petroleo Brasileiro and Lokman Hekim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petroleo Brasileiro position performs unexpectedly, Lokman Hekim can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lokman Hekim will offset losses from the drop in Lokman Hekim's long position.

The idea behind Petroleo Brasileiro Petrobras and Lokman Hekim Engurusag pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.